What is a scout and leadership job

Here comes trouble

What got you into the automotive sector?

After graduating from high school, I went to the Swedish-language technical university on the west coast, which I completed with a Master of Science degree. I got into the automotive sector through my diploma thesis. At that time there was a factory near us that manufactured leaf springs for the heavy commercial vehicle industry and belonged to a Finnish-Swedish steel group that specialized in special steels and components. For my diploma thesis I designed a computer model for the dynamics of the suspension of a complete axle and examined how the parts interact: springs, stabilizers, shock absorbers, tires.

If you are working in a company as a graduate student, not all questions have been answered with the thesis, but there is often a need for further investigations. It was the same for me, so they made me an offer to stay. I started as an engineer, first in development, later in sales, then I took on responsibility for a new business area, the so-called tube stabilizers, which we developed and patented ourselves. Even then, for reasons of cost, people looked closely at the total weight of the vehicles and looked at the question of how each component in the vehicle could be made lighter. With our innovation, we were able to save 45-50 percent of the weight of this part, that was around 20 kilos. That's not the world with a 15-ton vehicle, but if you approach every part with this philosophy, it does play a role. This product has enabled us to strengthen our market position in Europe and expand it towards Central Europe; it has acted as a door opener, so to speak.

After completing your studies, you got into development, then you went into sales. Did you even care?

Yes, that's the advantage of starting in a smaller company. Then it is easier to work across borders. Even as a development engineer, I was involved in technical sales. The fact that I was later given purely commercial responsibility certainly has to do with the fact that this world was no longer completely new to me, even if you naturally have to learn new things. As a plant, we had a turnover of around 15 million euros with around 100 employees, so you always work a little beyond the borders and thus learn a lot more broadly than in a large corporation.

What did you learn about leadership from the first bosses back then?

I partially understood that only later. Back then, in the mid-1990s, we were already on the move with process organization, i.e. away from hierarchies, with a strong focus on customer benefits. The important thing was that at the end of the day there was a happy customer and good cash flow. What I learned back then, I later had a lot of use for. My impression is that in Central Europe typically - for whatever reasons - the hierarchies are more important than the processes. In the meantime, many companies have started to deal with process thinking, but I was lucky that we started a little earlier in the north. That certainly has something to do with the culture. I always had the impression that here in the north it was always about the matter, while in Central Europe it was much more about relationships, status, hierarchies. This also happens in the north, but much less so.

What exactly did you do in the sales area?

At that time we started to expand our market towards Central Europe. My job as export manager was actually to build customer relationships with the major German truck manufacturers, including manufacturers in Italy and Great Britain. That was a super interesting job, especially because we had a really interesting product with us. We started from scratch back then and it took about three to four years to establish ourselves in the market. It was a great experience for a young engineer.

We didn't actually sell a component with the new product, we actually sold a solution. The customer needed to save weight in the truck and we had a solution for this. So that we were the only one on the market at the time. It was also interesting to see how different the big giants work as an organization. With some you had an appointment with purchasing and if they were interested, they would organize everything internally for you: technology, testing, quality, etc. Then there were organizations where purchasing was only a small part and you yourself had all the relationships Organization had to build up. It always said: You have to have at least 25 business cards before you even get a chance to get a job. That was also true. And then there were all sorts of intermediate forms. That too - getting to know these completely different worlds - has helped me a lot in my current work. I did this operative sales for a relatively long time, from 1994 to 2008, because I continued to have this sales responsibility later when I became plant manager for the Finnish plant. It was only with the new job in Austria that I was no longer active on the operational front.

First development engineer, then sales, then plant manager?

As an intermediate level, I was initially in charge of the new business area, where I was first responsible for sales and then for technology and production. In the next step I became plant manager.

Was the business unit management your first managerial responsibility?

Yes, I headed my first small organizational unit there. Before that, I had no personnel responsibility, but I learned how to lead people at a very young age as a boy scout. That was a good school and it's not that much more complicated in the company either, it is all about the same principles: everyone has to understand what the goal looks like and, above all, everyone has to understand why it looks like this. What are the ways to get there and why do the ways look the way they look? Employees are only motivated and committed when they understand this. The important thing is that they have a self-interest in being there, they have to have the feeling: I make the difference. If everyone has this feeling that they are making an important contribution, then one also has a personal interest in achieving a great result.

When I look around companies like that, I don't necessarily get the feeling that this is actually widespread. So how do you go about that in concrete terms?

People want to have explained why it is the way it is and why I think we should do it this way and that to achieve the goal. People want to think for themselves and be able to decide whether that makes sense. So you have to explain it in detail first and then everyone has to be able to talk about it openly. If everyone thinks along, that can only improve my thinking.

However, this also requires the flexibility on your part to take different opinions seriously and take them up instead of immediately feeling attacked when someone questions something. Objections may be justified; other ideas may actually be better. Often it just turns out to be a kind of pseudo-participation, where you then push your thing through.

I'm not in a management job because I always know best how to get there, but because I accepted the challenge of bringing people together in order to achieve the best result together. That is why I like to have a managerial job and I have had good experiences with it.

The factory in Finland was then sold.

Yes, in 2003 to the Frauenthal Group. I was already a plant manager then.

How was the change?

It was already big, although the Frauenthal group gave us a lot of freedom. They had a great understanding of the cultural differences. We have now changed that a little. Frauenthal had a growth strategy at that time. We did have interesting products in the factory, but we had a structural problem in the factory: we were a little too small in size to be able to work very efficiently and cover fixed costs and be competitive. In addition, we were not well positioned from a logistical point of view. Swedish customers have also increasingly assembled and produced their trucks in Central Europe. We were quite a long way from the main markets. Therefore, the parent company then accepted an offer from Frauenthal. At Frauenthal we became the fifth plant, with special knowledge, but a difficult position in terms of structure and it was already foreseeable that the plant might be closed sooner or later because the market would consolidate. In 2006 the Finnish plant was actually closed and the products were split between the other plants in the group. So Frauenthal actually bought the technology and market share at the time. Of course it wasn't easy because the plant in the small town was a bigger employer. I was no longer the plant manager at the time, after moving to the group's new key account structure in 2005, where I had overall responsibility for some of the main customers, but I lived near the plant and had my office in the plant. in this respect, I have seen it all first hand.

Weren't all of your employees standing on the mat with the request: Do something!

Naturally. What can you say? The best is honesty: this is the situation. There are different opinions on every decision and of course we fought for the plant and made continuous improvements and changes in the plant, but that did not change the structural problem. Of course there were disappointments, but at the same time people understand a lot more than managers often believe. They all knew what the problem was and that it was hard to solve.

How did you go on?

I worked as a key account manager until October 2008 when the Frauenthal Group was restructured. The job was a good change: from plant management back into sales and distribution with a strong technical background and the technical knowledge of what is important in a manufacturing plant. I know how to develop, how to produce and also how to sell that. After the plant closed, I worked from my home office in Finland, but I was out and about a lot.

In 2008 the figures were still very good, but for a few months there have already been drastic declines in incoming orders. Two top managers then decided to leave the company and that was the reason for interviews with the managers in the second row and intensive discussions about the future direction. That was exciting and brought a lot. It was discussed very openly because it was seen as an opportunity to make modifications. I also made a concept of what I would like to do with the group and that generated interest. It was mainly in the direction of process management and a much closer collaboration between sales and product development, who were active in very different corners at the time.

Hasn't it been clear for a long time that there is enormous overcapacity in the market?

Yeah yeah Back then it was a double challenge because everything happened at the same time. It was about putting the company on a new organizational footing, forcing a new way of thinking, and all of this while markets were collapsing at the same time. Certain measures were certainly "low hanging fruits" that had been in the air for a long time, e.g. bringing together development and sales. The crisis then brought us to difficult decisions, namely how to shrink so that, firstly, it conserves liquidity and, secondly, does not harm us in the medium and long term.

There were now 13 plants. How do you proceed?

You have to consider which structure is viable in an even fiercer competitive situation and how it will be safe in the future. We had a turnover of approx. 200 million with the 7 spring mechanisms. It was more or less self-evident that there was potential for efficiency here. It was clear that in the future we would have to be able to generate the same turnover with significantly fewer plants and thus fewer fixed costs. So we had to consider what are the four works we are going to continue with and what is the path during this contraction phase? Two plants were then sold, one was shut down. That sounds easier than it is, because it all had to be done in close cooperation with the customer. This is about business to business and the customer has a very close relationship with an existing supplier. So when we say, dear customer, that we will be supplying this from a different plant in the future so that we can remain competitive, then that means for him that he will get parts from plant B that he previously received from plant A. You first have to convince the customer that plant B is just as good in terms of quality, that they are also always able to deliver, that the logistics work and you have to describe to them exactly what the transfer phase will look like with the relocation. So after the decision is made, the hard work only begins. Such a relocation is a highly complex process so that it suits the customer. We started these transfer projects in April 2009 and we have fully concentrated on them last year. Incidentally, the fact that we were able to make this relocation had to do with the low demand. That would not have been possible a year or two earlier, because the demand was sometimes 110 percent of our capacity. Now we could do that, but at the same time the competition was greater than ever because everyone was fighting furiously for orders. If such a transfer does not succeed, competitors A, B, and C are already waiting in front of the door to happily take on orders.

How do you manage to act and implement quickly?

We were heavily focused on liquidity, had high restructuring costs, but as a reward we saw the results of the hard work as early as the end of 2009. Our goal was to be cash-neutral by the end of the year, with sales 55 percent below the 2008 level! We achieved that and that really amazed me.

All the cost breakers are happy: see what's still going on, right?

In such a situation, you cannot avoid reducing costs. The question is how intelligently do you do it? Do you use it as an opportunity to renew, focus, change old systems or not. We worked day and night, but the result was there too. In 2010 we will start with a market situation that is slowly improving and, despite halving our sales, we will no longer lose any money. The way there was: Fixed costs wherever possible: We closed offices, sold two plants, closed one plant, we cleaned up our structure and improved many, many small things. Today we have our noses above the water level and can survive, even if 2010 turns out to be a bad year.

What are the working days like in such a phase? Do you sit in meetings all day and do some persuasion?

There were two main areas: internal structural restructuring and working with customers. I was out with customers a lot to tell them what we are doing and why it makes sense for them to continue with us. Internally, it is important to communicate why we are doing this, how deep the crisis is, but also to give hope that the sun will come back after the rain.

Was it all foreseeable when you took over the management of the automotive division?

Partly already. I had no idea at the time that the crisis was going to be so deep, but I already knew: Here comes trouble.

Do you always know what to do or are you at a loss and think to yourself: I have no idea what to do now?

No, that was never actually the case. Rather, they are situations where you have to make a decision: should we go left or right? So where it's about making decisions while time is playing against you. I have certainly never learned as much as I learned last year in my professional life. The goal is clear, it's about survival and that's what you are fully focused on. Perhaps the fear would have been greater if the market had only fallen by 20-30 percent, then there would have been a greater risk of hesitation or shrinking back from radical changes, but the crisis was so deep that it was clear that it would be done immediately must act.

It was pretty clear what we should focus on: strengthened customer relationships, safeguarding liquidity and rapid restructuring while at the same time being careful not to destroy the valuable part of the company in the process. I have to say: Although the crisis was so big - and it is not over yet - there have never been any major differences of opinion among colleagues in management. That convinced me and confirmed that even extremely difficult topics can be tackled together if you put them openly on the table and talk about them openly. Conflicts usually arise when you don't talk to one another enough.

What has really changed now, except that the number of works has shrunk?

On the one hand, our customer interface and internal cohesion are much better today. Really much better.We listen, are active, innovative, develop, and we manage our plants very differently than we did a year ago. In the past, they were typically controlled via the normal P&L invoice, now we have central responsibility for prices, for which plants do what, for the allocations. The plants have no influence on this, so it makes no sense to control via a P&L, because the plant managers cannot influence it 100 percent. So we said to the plant managers: Your most important key figures are productivity, quality, logistics and customer satisfaction. If you can do that, you've done your job. That too is a question of communication. The side effect of the new key figures is that there is suddenly transparency as to who is particularly good and where, which means that more can be learned from each other. The new numbers are just a lot more telling.

For me personally it was extremely important in this situation that I have such a broad background. I know how sales work is done in the automotive sector, I was a plant manager myself for six years, so I know how to produce and I know how to develop. This broad experience, including my early experiences with process thinking, helped me enormously in this crisis, both internally and with customers. I have recently been able to take myself out of the operational business a little and concentrate on thinking about how we should continue: What's next?

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